How to Measure Return on Digital Investment (RODI)

The questions marketers need to ask to improve their digital marketing spend.

When it comes to measuring return on digital investment (RODI), it's important for marketers to start with the why: Why should I invest a dollar in SEM, display, or any other digital channel?

Many organizations structure their digital spend on technology and marketing based on “topic-of-the-day” themes, rather than organizational needs. You can imagine how many billions of dollars are spent inefficiently based on these ineffective guiding principles.

Over the past 10 years, I've served as a digital transformation consultant, and I've witnessed a widening gap between effective best practices and the current state of affairs. As digital budgets increased and we all celebrated the digital “gold rush” era, digital took on an entrepreneurial outlook that seemed promising. So, what happened that led digital disruption to become a disruption of digital? It was a combination of unclear top-down digital strategies and a lack of digital talent that created a digital vacuum and a false start.

RODI assumes that the right structures are in place to efficiently improve marketing spend. Before deep diving into how to improve digital marketing spend, marketers need to assess the current processes in place and ask the following questions:

1) Do we have the right digital talent?

a. No? Is this talent developable?

b. Yes? What kind of training do they need?

2) How is your company's relationship with the agency?

a. Does your company drive the dashboards and scoring, or does the agency?

b. Is there a data strategy in place to see campaign effectiveness in real time within the company (not the agency)?

Nowadays, companies are shifting from relying on the agency model to developing in-house expertise. But with scarce digital and data talent, companies are often left in a catch-22: Should they outsource the headache or “in-source” it?

Fifty percent of solving a problem is identifying the problem, and marketers can often pinpoint their pains by taking a closer look at the analytics: Do you have the tools to quantify digital performance? To be more specific, how is your Google Analytics (or even better your Adobe Analytics) setup? Does your analytics provider give you the information you need to build effective and usable dashboards and judge agency performance?

If your analytics setup is thorough and it's maintained properly, then the organizational process realignment and the digital channel assessment is much clearer. As a result, your RODI can be calculated more effectively. SEM, display, remarketing, email, and social can be monitored closely and in real-time.

When it comes to analyzing how your retail marketing spend correlates with your digital outcomes (revenue or signups), marketers can setup a dashboard with a minute-by-minute look at the number of visits to your shopping cart (not site). This allows you to see how many site visitors are engaging with your products or touchpoints, versus your general content. Overlaying the TV, radio, display, and email campaigns in market with this minute-by-minute graph of visits to the shopping cart can help you see the strongest influencer to your bottom line. Of course, you have to take into account the attribution of these channels. And in a retail or sale activity, the channels that generate the strongest revenue should receive the heavier weight of attribution. The ability to target people with intent also becomes a higher priority.

Finally, you have to differentiate the retail dollars from the branding dollars to establish a more accurate assessment of RODI. Ask yourself: What is your CPA (cost per acquisition) for every channel compared to your DRPA (digital revenue per acquisition)?

Follow these steps and you'll be on your way to better RODI measurement.

Ahmed Elemam is the senior digital strategist for one of Canada's top airlines WestJet, as well as a digital transformation consultant for AKN Solutions. At WestJet, he overlooks channel management, analytics, customer segmentation, and the Adobe “premium” Marketing Cloud. Prior to this role, Elemam led Tour Egypt, one of the top online destination niche tour operators, where he assembled a team of 35 employees with a heavy focus on digital optimization. He was also selected as one of the top three MBA students for Air Canada's leadership program and went on to become manager of Air Canada's top product “Rapidair.” Elemam holds a BA in economics and an MBA from McMaster University.Hecurrently lives in Toronto. Email: ahmed.elemam@aknsolutions.com | ahmed.elemam@westjet.com

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